In the business world, critical thinking skills improve judgment, problem solving techniques, quality of analyzing situations, and hence it results in a more balanced, informed and reasoned decision-making process. Critical thinking in the decision-making process helps examine alternative choices and deciding on the best courses of actions to take to deal with new developments. Critical thinking is an essential ingredient to meet firm’s short- and long-term goals since it helps gain a clearer understanding of best practices to make the right decisions and improve the effective implementations of the decisions. Thus, applying critical thinking in decision-making is considered as one of the most important skills in effective business decision-making process.

Learning skills for critical thinking in decision-making process are very indispensable for college graduates. You need to develop and practice your critical thinking skills that can be applied to new tasks and new situations. The Career Services has prepared various videos to this effect on important career skills, including on critical thinking.

The changes in the natures and forms of competitions, macroeconomic conditions, fiscal policy and monetary policy tools (instruments) affect the performance of companies. With a Global Fortune 500 Company you selected for your research in your mind, utilize (demonstrate) your critical thinking skills in your discussion and analysis of the following questions.

1. Competition is generally considered to be a source of growth for companies as well as for the general economy. Studies confirm that competition leads to more efficient resource use. Yet, competitive forces also result in firms being driven out of the market. Moreover, firms compete through innovations and introducing new products to the market. Some of these products will be successful and others will end up failures.
   Why is competition important for efficient use of resources? What can the company you researched do to compete effectively? How may the company avoid business failure competitions induce?
   What determines whether the new products are successful or failures? How important is innovation and product differentiation as the source of growth for the company of your research?
2. Business cycles lead to fluctuations of macroeconomic indicators, and hence they have impacts on the performance of firms. Suppose the economy is under recessionary pressure. The uncertainty about the future causes households to increase their saving and reduce their consumption. In another situation, suppose the household saves little and spends most of its income on current consumption.
   How does a company prepare to weather the ups and downs of the business cycles? How will the situations that influence household spending behavior affect the company you selected for research? How can the company plan to deal with the economic decline and decrease in household spending to be profitable on a sustainable basis?
3. Fiscal policy deals with the government's spending and taxation practices. The changes in fiscal policy affect households and firms (companies) in the economy. Monetary Policy refers to the actions of the Federal Reserve to control (regulate) money supply to influence the rate of interests in the economy. The change in the rate of interests affects companies and households. Suppose the Federal Reserve increased the money supply to reduce the rate of interest.
   How does this affect the company you selected for your research? How can the company prepare itself to deal with the changes in fiscal policy and monetary policy? What actions do you suggest for the firm to undertake to ensure success on a sustainable basis during the changes in macroeconomic environments pertaining to fiscal policy and monetary policy?

Do the discussion first with reference and citation then do the response below.

Posted 1

1. Competition encourages a company to reduce expenses in order to be able to market a product at the lowest possible cost. This can give them the ability to make a profit while trying to market the product at a cost less than their competitors. 3M was the company that I researched. They have a wide variety of products available. To continue to compete effectively, it is important for them to continue to advance in research and product development. According to 3M History (n.d.), one third of 3M’s product sales are from products that were developed within the past five years. To continue to avoid business failure, it will be important for 3M to test products and stay current with the needs of consumers. This will allow them to promote products that are in high demand for consumer needs.

Innovation and product differentiation is very important for 3M as they strive to stay at the top of the market with many of the products they offer. They invest greatly in product innovation with scientists on staff to help product the best products possible. New products can be deemed successful through product testing, focus group reviews, and pure sales of products. As new products are introduced, it will be important for 3M to pay attention to the demand curve of the product to know when they need to make modifications or improvements to the product or retire the product from circulation.

1. A company can prepare to weather the ups and downs of the business cycles by retaining revenues when the company is in an up cycle. They can invest and allow excess revenues to be saved for future use. This will allow for the excess funds to be utilized in the business during the down cycle. This could be through selling assets that are in excess. A company like 3M can deal with economic decline and reduced household spending by adjusting the focus on the many products they offer. As the cycle slows, they can focus on their more popular products and reduce development or production of products in lower demand. Adjusting their focus will allow them to reduce expenses.

Posted 2

Apple Inc has always had the goal to be the most innovative company in the technology sector, and they have done that very well over the last decade. What determines Apple’s success in new products is interest generated at their yearly press release of new products, and the following increase in stocks (usually), and then the demand for pre-orders for that specific product. It will also come in reviews from consumers about products, if there are any issues, bugs, technology glitches, etc. Apple is also always doing continuous research and it has led them successfully thus far; technology and software that needs updates or has become obsolete in consumers lives, or convenience and accessibility that is needed for consumers.

Companies need to weather for the ups and downs of a business cycle be preparing early; this means that they had to forecast a downward trend in their upcoming quarterly reports as well as making sure their preparations are long term. No one can ever really know how long a recession is going to last, and so companies need to make sure they are focused on growth instead of aggressively cutting spending. Household spending will definitely impact Apple because people may be hanging onto their products longer than rushing out to buy the latest model or perhaps purchasing a cheaper model. For example, someone who needs a new phone would not purchase the iPhone 13, but maybe the 11 or the iphone XR if they really needed a new one. Household spending may jump to a cheaper option altogether because they are simply unable to afford such a luxury item, like a Samsung Android which has many features Apple does, even though it was not compatible with Apple. Apple could continually offer Trade in offers (money toward a new phone when trading in an older model), or other Black Friday/Holiday offers that always entice people to buy.

Fiscal policy would impact Apple only if they decided to raise the tax rates on the products themselves or tariffs from other countries (since most of the Apple manufacturer’s are in China). Monetary policy could drastically impact Apple if the government were to become aggressive in trying to prevent a depression or recession. By encouraging people to buy/spend more they could do stimulus money checks, to try and jumpstart the economy. People who would perhaps need new products would use their stimulus money to purchase Appel products before they can no longer afford to. In order to keep up with these governmental policies, Apple would have to reach deep into its trillions of dollars in profit reserve to help keep the company afloat, when their tax prices are bound to go up. Apple could use their reserves to help offset tax hikes on their products, so people wouldn’t be put off by the high prices. Apple could use their many tax breaks to offset the policies.

Posted 3

Competition is the key to innovation and proper motivation of the best usage of resources. In any economy, meaning a space with limited resources that must figure out how best to utilize them, innovation is the key to defeat stagnation. While an economy may be deemed strong; medical and technological advances are the key to increasing the output of the economy. Competition harnesses human greed and the need to survive and puts them into a human formula for these limited resources. If a company does not innovate and compete, it will die. However, if it does so it will see a significant increase in its revenue and growth.

In the case of Lockheed Martin, this is evident with their competitive bidding for government contracts. While much could be said about how true free market forces are removed from the defense industry, since the US government is the sole consumer, within the current form of this industry it is important to prove competency and offer products and technologies at a cheaper price than competitors. For example, if Boeing can create a missile defense system at a cheaper price than Lockheed Martin and the system seems just as competent as the one Lockheed has made, then the government will give the bid to Boeing. This competition inspires the companies to innovate as effectively and as inexpensively as possible. This inspires them to be much harder working than it would if there was no competitive aspect, see the BMV and VA hospitals for examples of this type of business model.

If the Federal Reserve were to take action that lowers or raises interest rates, this would not significantly affect Lockheed’s business model. They rely on direct government contracts for their primary source of revenue, and money supply would only affect this if the government ensured to collect an increased amount of tax dollars and chose to increase the US military budget. However, a change in interest rates may force a restructure of any outstanding debt (bonds) that Lockheed has issued or change the dividend rate that their stock pays. Otherwise, this would have negligible affects on them as a company.